China: IFC to invest $100m in IPO-bound Penyao Environmental Protection

A youth cools himself off at a water fountain near Marina Bay in Singapore July 27, 2015. REUTERS/Edgar Su/Files

The International Finance Corporation (IFC), the private lending arm of World Bank, has proposed to invest $100 million in China’s Penyao Environmental Protection Co. Ltd to support its water and wastewater treatment (WWT) projects, said IFC in a disclosure on June 16.

Penyao EP is a privately-held company, preparing for IPO in China. It is currently 36.12% owned by chairman WANG Hongchun and his brother WANG Chunlin.

The proceeds from the proposed IFC investment will be used for three WWT projects and two bulk water supply projects in five counties in China, as well as to refinance some short-term debt thus helping the company to rationalize its capital structure, the disclosure said.

While the total project cost is estimated at about $172.2 million, IFC will contribute $100 million in phases. Phase I will be in the form of an A loan of up to RMB410 million ($60 million), it added.

The five greenfield projects to be financed by IFC are located in Zhoukou City in Henan Province, Yuanjiang City and Qiyang City in Hunan Province, as well as Alashan and Sha’erqin in Inner Mongolia Province. Four projects to be financed by IFC are 100% directly owned by Penyao EP, while Yuanjiang WWT project is 70% directly owned by Penyao EP.

By reducing the volume of untreated wastewater discharged, the project is expected to reduce environmental pollution of local water courses and reduce health risks to the local population, the disclosure said.

Founded in 1984, Penyao EP is an integrated WWT company that owns/operates a sizeable portfolio of municipal BOT/TOT projects, provides EPC and BT services as well as manufactures/sells water/wastewater equipment.

As of 31 December 2016, Penyao EP had a total of 19 operational and pipeline BOT/TOT projects across seven provinces in China, including 13 WWT projects, four water supply projects, one reclaimed water project and one sludge treatment project. Total design capacity for water/WWT projects amounted to 1.6 million tpd.

Also Read: HK: IFC injects $25m in Minsheng IPO, may invest $4m more to support expansion

Exclusive: IFC to invest $10m in Chinese dried noodles maker Xiang Nian